LatinFinance - Special Edition - August 2013 - 60

2
THE
FUTURE
OF LATIN
FINANCE

A cooling over the years in relations between Latin America and Washington is not only
regrettable, but misguided, says Nicholas Brady, a former US Treasury Secretary.
Developments in the global economy could reverse that dynamic. By Taimur Ahmad

Nicholas Brady
Ties that bind

hen attempting to describe the ideal relationship between his country and the US, argentina’s Guido di tella, then
ambassador in Washington, once said that what he really sought was
“carnal relations” between the two nations.
times have changed since 1989.
today, it is hard to imagine such a quip being made by any latin nation – let alone argentina. Perhaps even less conceivable is the merest
hint of intimacy with Washington from capitals in region.
indeed, the relationship – both political and economic – between the
US and much of the region to its south is unrecognizable from a quarter
of a century ago.
While Wall Street has become ever more engaged with latin
america’s companies and financial markets, the relationship between
the states has suffered from over a decade of what many see as benign
neglect by Washington.
US influence in the region has also been in relative decline following
a period of unprecedented economic growth for latin america, where
the region has diversified its trade ties and seen the advent of a new
era of political leaders only too happy to challenge US influence, while
championing regional autonomy.
for nicholas Brady, US treasury Secretary from 1988 to 1993, such a
decline in regional relations is not only regrettable, but misguided.
in an interview with LatinFinance, Brady – the architect in 1989 of the Brady Plan to restructure latin american and other less developed country debt – says that a rapidly changing global economy demands that the relationship between the two is once again prioritized.
“it is clearly in the US’s economic and political interest to give latin america more importance among its global priorities,” he says.
“Both sides would benefit greatly if the relationship graduated from its current ‘backyard
neighbor’ status to that of important strategic partners on a much broader set of issues shaping global political and economic trends.”
Mutual benefit
this is especially true as the US economy starts to recover, five years on from the global crisis
– and as china, the main force behind latin america’s growing economic independence,
slows.
the region’s trade with china, which has surpassed that between the asian country and
the US, is worth over $250 billion a year, more than a 20-fold increase since 2000.

60 l atinfina nce.com - 25 Years - August 2013

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BRADY: Latin America must “graduate
from its current ‘backyard neighbor’
status”

But Brady warns that “the dependence of
many countries on commodity exports to
asia could become problematic as china’s
economy slows.” moreover, he says, “the
economies of the region are substantially
linked to the global economy – which has
shown a decidedly mixed performance.”
Such a détente between latin america
and the US could, therefore, be born of
necessity, especially if the region’s principal
trading partner diminishes while america’s
economy regains its footing.
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